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Paint Makers Rebuked on Hidden Tokens

Monday, January 16, 2012

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Pakistan’s anti-trust agency has ordered subsidiaries of AkzoNobel, Nippon, Berger and 13 other paint companies to stop a longstanding practice of hiding monetary tokens for painters in the paint packaging.

According to the Competition Commission of Pakistan (CCP), the companies conceal discounts or tokens worth money at the bottom of packs of paint. The value of the tokens varies with the brand and the size of the pack, and end users do not know about them, the commission said.

 mu6 / deviantart

 mu6 / deviantart

Pakistan’s anti-trust watchdog agency ordered 16 paint manufacturers to change their marketing practices.

Under the practice, which dates back years, the painter buys the paint at the advertised price, then cashes in the token with the company, and charges the unsuspecting end user the full price.

‘Misleading Information’

“This non-disclosure of important information amounts to the distribution of misleading information as to the price of the paint packs,” the commission said.

The tokens range in value from about 50 to 500 Pakistan Rupees—about 55 cents to $5.53 US. The average annual income in Pakistan is about $420 US, so a $5 token would be more than 1 percent of annual income—comparable, for example, to about $475 on an annual income of $40,000 US.

Last summer, the commission ordered Show Cause Notices to the 16 companies for prima facie violation of Section 10 of the Competition Act of 2010 pertaining to deceptive marketing practices.

After the companies were heard on the matter, a three-person panel of commissioners issued an order Friday (Jan. 13) to disclose the practice.

Disclosures Ordered

The commission reprimanded the companies and ordered them to “ensure more responsible behavior” in future marketing.

Information about the tokens should be printed “with the use of bright/conspicuous colors distinct from the color of the packaging of the paint pack and should be in clear, bold and legible size for the consumer,” the commission said in a release.

All ads, promotional materials and manuals must be modified within 60 days to disclose the presence of tokens and their value, and the companies must issue four public notices about the practice.

The companies must also file a compliance report on implementation of the directive by March 30, the commission said.

Leniency, for Now

The companies’ promise to disclose the practice earned them leniency, the commission said, and no action will be taken against them now.

Future incidents, however, will draw penalties, the panel added.

The companies are ICI Pakistan Ltd. (a business unit of AkzoNobel), Nippon Paint Pakistan Ltd.,  Kansai Paint Ltd.,  Berger Paints Pakistan Ltd.,  Brighto Paints Ltd.,  Diamond Paint Industries Ltd.,  Mansoor Paint Industries,  UP Paint Industries Ltd.,  Nelson Paint Industries,  Chawla Chemical and Metal Industries Ltd.,  Brolac Paints  Ltd., Karss Paints Industries Ltd.,  Allied Paint Industries,  Sika Paint Industries  Ltd.,  Rafiq Polymer Industries and  Black Horse Paints.

   

Tagged categories: Berger Paints; Business operations; ICI Paints; Marketing; Nippon Paint; Pricing

Comment from MUHAMMAD ANIS DANGRA, (1/17/2012, 12:29 PM)

We think it is a very good decision to stable the consumer prices and improve the quality of products


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